The Next Airline Fee: Buying Tickets?

There are fees for checked luggage, reservation changes and even pillows and blankets. And now, one airline is poised to start levying a fee when you simply buy a ticket.

Spirit Airlines
Inc.,
an ultra-low-cost carrier that has pioneered many fees, says it has worked out an agreement with the U.S. Department of Transportation to begin charging a "passenger usage fee" -- perhaps $5 to $10 per ticket -- for the privilege of buying a ticket anyplace other than at Spirit's airport ticket counters.

The fee, designed to cover reservation-booking costs, will be part of Spirit's aggressive and edgy strategy, which doesn't always fly well with passengers. Spirit already has ruffled some feathers with its racy promotions, ads in airplane cabins and on flight-attendant uniforms, fees to reserve seats and the addition of travel insurance to tickets unless customers opt out.

Rival airlines aren't expected to follow Spirit's boundary-stretching usage fee -- unless it proves to be a successful revenue generator. Most airlines already charge to book through telephone reservation centers and will be watching closely to see if consumers acquiesce to broader booking fees.

More

For airlines, one huge advantage of fees is that they don't show up in most reservation systems when consumers are shopping for airfares. That's because airlines aren't required to advertise fees that only certain customers will pay, like those checking baggage. As a result, head-to-head price comparisons at booking sites like Expedia.com, Travelocity.com and Orbitz.com become more difficult, and prices listed in travel-agency computers won't tell the whole story. What's more, low teaser rates can lure fliers, even if the ultimate cost of the travel is higher.

Spirit Chief Executive Ben Baldanza says he can't say when his airline will start charging the fee because the government bars carriers from talking about future pricing actions. The fee is simply part of Spirit's effort to separate as many services and costs out of base ticket prices as it can, he says. "We want people to know exactly what they are buying," Mr. Baldanza says.

Spirit tried charging a $7.90 passenger usage fee last year, along with a $2.50 "natural occurrence interruption fee" (to cover storm-related costs) and an $8.50 "international service recovery fee" to pay for some taxes and fees the airline pays to foreign governments. But the DOT stepped in and ordered the airline to stop; federal rules require airlines to include airline-imposed charges that all customers must pay in advertised fares.

Spirit was fined $40,000 but remained undeterred. Since then, the airline has been negotiating with the DOT to find an acceptable way under department rules to charge the passenger booking fee. "We will be reintroducing it in a way the DOT is comfortable with," Mr. Baldanza says.

ENLARGE

Spirit Airlines, an ultra-low-cost carrier, can be considered a pioneer of fees.
Scott McCartney/The Wall Street Journal

But it's not clear exactly how Spirit will disclose its usage fee -- the company wouldn't yet discuss details. In a statement, the DOT says, "We have informed Spirit that they can charge a fee for buying tickets at locations other than ticket counters only if the fee is included in the price advertised on its Web site."

For consumers, fees have made the complex world of airline tickets that much trickier. When Mark Friedman of New York bought Spirit tickets for a trip to Florida later this month, he never imagined he'd have to pay extra to reserve a seat assignment in advance.

Spirit's Web site offers little disclosure of that fee: You have to click through into "travel policies" to find a mention that Spirit charges a fee to reserve seats in advance ($15 for an exit-row seat one way; $12 for a window or aisle seat, $5 for a middle seat). The seat-assignment fee also doesn't show up on a pre-purchase page of add-ons Spirit offers, such as travel insurance. Only after a purchase is made does Spirit offer the opportunity to pay to reserve a seat with a second credit-card charge.

"It's a blatantly misleading way to run their business," Mr. Friedman says. He complained to the company but got no relief, so he paid $24 to reserve seats for his round-trip itinerary.

Spirit says customers who don't want to pay to pick early can get reserved seats 24 hours before departure when they check-in. The seat fee isn't shown before buying a ticket because it isn't required, Spirit says.

Another potential trap for consumers: Spirit's Web site automatically checks the box to accept travel insurance. To avoid the added expense, consumers have to un-click the box. "It's not like we snooker people into buying it because more than 50% uncheck the box," Mr. Baldanza says.

Kevin Ruth, a college math teacher, has been a loyal and frequent Spirit customer for the past two years. "I like the cheap flights," he says.

Last week he was flying to Montego Bay on a $140 ticket that went up to $180 round-trip with the baggage fees -- still a good deal, he says. He declined paying to reserve a seat (and got a window seat anyway) and skipped the travel insurance. With fees going up and policies difficult to maneuver, "I'm starting to get a little less attracted to Spirit," he says. "It's a chore -- you have to do your homework."

With 28 Airbus planes, Spirit serves mostly Eastern and Midwestern U.S. cities, plus Caribbean and Latin American destinations, with its biggest hub in Fort Lauderdale, Fla. One-third of the airline's revenue will come from things other than base ticket sales by the end of this year, according to marketing chief Barry Biffle.

About half of that ancillary revenue will come from charging for perks once considered included in the price of tickets, such as baggage service and $3 sodas, and the rest of the nonticket revenue will come from sales of travel insurance, frequent-flier miles, ads inside airplanes and other promotions.

Mr. Baldanza has stretched airline industry norms with edgy ad campaigns, usually sent to regular customers through email and laden with political references and sexual innuendo. A recent ad with a tag, "Many Islands, Low Fares" drew ire for its use of an acronym that is also an obscene term for a sexually attractive mother. But it landed Mr. Baldanza and Spirit on television news broadcasts, and the sale proved to be "extremely successful," the CEO says.

This copy is for your personal, non-commercial use only. Distribution and use of this material are governed by our Subscriber Agreement and by copyright law. For non-personal use or to order multiple copies, please contact Dow Jones Reprints at 1-800-843-0008 or visit www.djreprints.com.